By Andy B. Mayfair
Gold isn’t shining quite so brightly lately.
Citigroup Inc. and JPMorgan Chase & Co. have each closed out their bets on gold.
JPMorgan has said that it has unwound its gold hedge, moving from an overweight recommendation to an underweight one. Citigroup went public with the fact that is has gone away from its long position in gold.
“The rejigging comes amid the worst week for gold since May 2017, when riskier assets were propelled by the story of synchronous global growth and havens were in little demand,” reported Bloomberg’s Joanna Ossinger. “Bonds have also been losers, and the two teams made adjustments there as well: Citigroup opened a short bet against German bunds, and JPMorgan went more deeply underweight on its government-bond position.”
On Thursday, JPMorgan said in a letter that “Signs of a cyclical recovery, easing geopolitical tensions, synchronized monetary easing, and defensive investor positioning across asset classes” convinced top brass to lean closer toward risk.
JPMorgan Chase & Co.’s asset-allocation team including Marko Kolanovic, Nikolaos Panigirtzoglou and John Normand “said it unwound its gold hedge, moving to an underweight recommendation from an overweight one. Citigroup Inc. strategists including Jeremy Hale abandoned a long position in gold, in their asset-allocation note Thursday,” Bloomberg reported.
Indeed, Morgan “has been one of the more aggressive Wall Street shops on stocks for some time, and it is reiterating its overweight call on equities and commodities and underweight on bonds,” MarketWatch noted. “What’s new is that it’s reversing an overweight in gold to a small underweight, as well as shifting part of its underweight from credit to government bonds.”
“We maintain a significant and incrementally larger tilt in our model portfolio towards risky assets, based on signs of a cyclical recovery, easing geopolitical tensions, synchronized monetary easing, and defensive investor positioning across asset classes,” said its strategy team, led by Marko Kolanovic, according to MarketWatch.
Kitco News called it “not surprising that gold is consolidating into year-end, but it doesn’t mean that it won’t cross into the $1,600 territory next year,” citing sources at RBC Capital Markets. “Gold is likely to finish the year in the $1,400s range as the precious metal has run out of steam due to higher U.S. equities, monetary policy direction and positive U.S.-China trade headlines, said RBC Capital Markets commodity strategists Christopher Louney.”